The board of Wayside Technology Group, Inc. (NASDAQ:WSTG) has announced that it will pay a dividend of $0.17 per share on the 19th of August. The dividend yield will be 2.2% based on this payment which is still above the industry average.

Check out our latest analysis for Wayside Technology Group

Wayside Technology Group's Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, Wayside Technology Group's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 12.9% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 26% by next year, which is in a pretty sustainable range.

Wayside Technology Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the dividend has gone from $0.64 total annually to $0.68. Dividend payments have been growing, but very slowly over the period. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Wayside Technology Group has impressed us by growing EPS at 13% per year over the past five years. Wayside Technology Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Wayside Technology Group Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Wayside Technology Group might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Wayside Technology Group that investors need to be conscious of moving forward. Is Wayside Technology Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.